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Relationship Between Economic Growth and Nonprofit Sector: An Analysis of Structural Breaks and Causality in Turkey

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  • Halil Tunali

    (İstanbul Üniversitesi, İktisat Fakültesi, İktisat Bölümü, İstanbul, Türkiye)

  • Gulcin Kaya İnceiplik

    (İstanbul Üniversitesi, İktisat Fakültesi, İktisat Bölümü, İstanbul, Türkiye)

Abstract

The nonprofit sector, which is continually developing in terms of quality and quantity, is considered crucial in sustainable development and economic growth. The sector’s presence in the relevant literature is currently limited to social, cultural, and political fields. Consequently, the relationship between nonprofit organizations and economic growth is scarcely studied in the literature, with most studies focusing on conceptual explanations of the financial size of nonprofit organizations. Based on the example of Turkey, for a crucial start in this area, the primary aim of this study is to examine the relationship between gross national product (GNP) and nonprofit organizations’ incomes during 1975–2006. For evaluating the causality between variables, Dickey Fuller and Augmented Dickey Fuller were applied with the variables determined as stable at the first difference. According to results from Zivot and Andrews applied by considering structural breaks as the first step in the analysis, which is different from those used in the literature, revealed that breaking points for the GNP and nonprofit organizations were in 2000 and 1993, respectively. According to Toda–Yamamoto results, no causality was observed between the income of the nonprofit organizations and economic growth. In light of these findings, a proposal was made to create new public policies for establishing an effective third sector and aiding the development of this sector through a strong foundation.

Suggested Citation

  • Halil Tunali & Gulcin Kaya İnceiplik, 2020. "Relationship Between Economic Growth and Nonprofit Sector: An Analysis of Structural Breaks and Causality in Turkey," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 70(2), pages 359-385, December.
    • Handle: RePEc:ist:journl:v:70:y:2020:i:2:p:359-385
    DOI: 10.26650/ISTJECON2020-833105
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    References listed on IDEAS

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    1. Zivot, Eric & Andrews, Donald W K, 2002. "Further Evidence on the Great Crash, the Oil-Price Shock, and the Unit-Root Hypothesis," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 25-44, January.
    2. Toda, Hiro Y. & Yamamoto, Taku, 1995. "Statistical inference in vector autoregressions with possibly integrated processes," Journal of Econometrics, Elsevier, vol. 66(1-2), pages 225-250.
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